New York's Public Housing Dilemma
Congress has been playing chicken over housing (and climate) funding. New York has to take the wheel.
This is another long post, but please bear with it. It’s worth understanding the need, the structure of the solutions, and the possibilities they open up for the future.
At the national level, we don’t fund new public housing today—Congress cut the legs out from under its role in doing so decades ago with Clinton-era welfare reforms. The funding reductions that were part of those reforms have been baked into the political fabric: even while New York City’s public housing is falling apart around some of the most vulnerable families in the city, New York City Housing Authority (NYCHA) residents, workers, and advocates must fight tooth and nail in hopes of getting even a partial down-payment on its tremendous $40 billion basic repairs backlog.
But we haven’t always been—and needn’t always be—so dependent on the federal government for every aspect of public housing. NYCHA was, to be sure, an early public housing developer, but it was not the first, as many believe. In fact it was the one of the several Socialist mayors of Milwaukee, Daniel Hoan, who created the first municipal public housing agency in the US back in 1923. NYCHA, created in 1935, was the second agency of its kind.
Some background on how we got here
Over the past two decades (as I’ve written about here before), federal spending on public housing has declined precipitously (the capital funds account is down by 62%), sinking people’s homes (and our public assets) deeper into distress and deferred maintenance. It’s a sad state of affairs, especially in that critics of public housing point to the deferred maintenance that results from this defunding as proof of the program’s failure, a curious form of logic—like refusing to pay the electric bill and then proclaiming “see, electricity doesn’t even work!” when the power goes out.
Several programs emerged over this two decade period to move public housing properties out of Section 9—the legal framework for HUD’s version of public housing—portfolios and into other HUD funding sources. Among them are HUD’s Rental Assistance Demonstration (RAD) program and Tenant Protection Voucher (TPV) program. RAD, for example make public housing properties eligible for Project Based Vouchers by bringing private management into the fold, and has seen huge uptake by Public Housing Authorities (PHAs) across the country over the past decade—including NYCHA.
NYCHA released a plan in 2020 that would effectively insulate itself from being pushed into private management RAD conversions called the Blueprint for Change. In essence, the Blueprint is a workaround to federal defunding brought about by President Clinton’s Quality Housing Act of 1998, one of several bipartisan death knells of public housing as we’ve known it. It works around the defunding by creating a new public entity at the state level that is eligible for Tenant Protection Vouchers, but which contracts work back to NYCHA—maintaining both public ownership and management.
To go over the situation, I’ve organized this post into a few sections:
Assessment of the need
Structure of the plan
What happens without funding?
Going beyond repairs
A long term vision
Assessment of the need
The headline number of NYCHA’s need is $40 billion, but reality is of course more complicated than headlines. That headline number is the estimated total cost, today, of the backlog of capital repairs, but importantly, by next year (and the year after, and so forth) that number will be even higher for two key reasons:
The hard costs—materials and labor—go up every year with simple inflation.
Deferred maintenance doesn’t just sit there, it grows. If it costs $10,000 for a new roof but you put it off for a year, it will only get worse and then you’ll have $15,000 worth of water damage repairs to pay for on top of the original cost.
The backlog at the national level, according to the National Association of Housing and Redevelopment Officials, grows by about $3.4 billion every year, and compounds at a rate of 8.7% per year—on top of the $3.4 billion—for the above mentioned reasons.
Even if we gave NYCHA the full $40 billion today (this is unlikely—the best estimates for what they could get from Build Back Better are closer to $25-30 billion—a great down payment, but by no means a total solution), there is no way on God’s green earth they could get shovels in the ground on every project tomorrow. In fact, the optimistic timeline to repair all 180,000 homes in NYCHA’s portfolio is in the order of ten to fifteen years, pushing the total backlog far higher than $40 billion.
The level of need at NYCHA cannot be overstated—it is tremendous. Nearly two decades of declining Capital Fund1 dollars has left the agency unable to complete basic repairs for things like elevators, plumbing, appliances and heating. This leaves residents of the properties in extremely vulnerable positions: no heat in the winter is extremely life threatening, as can be leaving seniors with no option but to take the stairs up and down ten flights.
By all accounts, the overwhelming priority concern of residents in our public housing comes down to this: repairs, now. On top of the overall costs, one thing that makes it difficult to do repairs quickly is the contracting process NYCHA must use for its capital projects: each portion, from architectural design to general contractor selection, requires its own year(s) long selection process, and NYCHA remains bound to simply choose the lowest bid proposal, unable to take factors like resident engagement and work quality into account—an outcome that mostly hurts tenants by slowing down building rehabilitation projects. NYCHA was recently given the ability to do basic design-build bids, and has been able to slightly speed up project timelines—a move in the right direction that could be pushed even further.
Structure of the plan
The way that the Blueprint would work at an organizational level is actually quite simple. There are four main things happening in the big picture:
State bill establishes the Housing Preservation Trust, a new public authority under New York State, with a board composed of both NYCHA and residents.
NYCHA transfers some properties to the public Trust and attaches the new TPV funding to the properties, allowing it to issue municipal bonds and quickly get the needed funding for the repairs backlog, as well as funding for staff capacity to speed that work up.
The Trust is able to use what’s called progressive design-build contracting, which could shave 12-24 months off of most project timelines and allow things like project quality and resident engagement to be factors in contract selection.
The Trust contracts all management and operations responsibilities back to NYCHA.
That’s the core of it. Basically, the Trust just exists so that NYCHA can be eligible for the TPV funding. The Trust really doesn’t do much of anything but collect checks from HUD, issue municipal bonds, and hand checks to NYCHA. The core benefit to this is the massive increase in funding levels from HUD: currently, the average home brings in about $1,250 per month, partly from tenant rents and partly from operating and capital subsidies. As Congress and HUD have reduced that subsidy funding over the past few decades, NYCHA has been left worse and worse off every year, with deferred maintenance costs growing higher and higher.
Moving the funding stream over to Tenant Protection Vouchers would bring the total per home up to $1,900 per month, about a 50% increase. That additional subsidy would allow NYCHA to raise billions overnight by issuing municipal bonds—the same public financing that funds projects for public schools, libraries, subways, and bridges.
And importantly, all of the rights of tenants under the law today are written directly into the legislation.
What happens without funding?
The core point that most people—proponents, opponents, and ambivalents of public housing—seem to gloss over is that there are 1.2 million households living in public housing today, comprising nearly half a million people in New York City alone. Almost all of these people are extremely poor, many are elderly and living on fixed incomes, and many more are single parents raising children. If this housing went away, either by disposition (being sold off), demolition, or the increasingly possible collapse into uninhabitability due to perpetual deferral of maintenance, we would immediately have an explosion of homelessness of some of the most vulnerable people in the country. This would be completely unacceptable.
Now, it’s unlikely—barring some confluence of natural or political disasters—the NYCHA portfolio would actually collapse first. In all likelihood, NYCHA would have few options but to push more housing into the RAD program—meaning, private management—in order to meet legal requirements for repairs and prevent the literal collapse of buildings. To some, this would be acceptable: as noted above, the primary concern of many NYCHA residents is simply that repairs happen as soon as possible. The political project of public production and provision of housing is secondary (or more realistically, tertiary or quaternary) to the material human need for habitable shelter.
For many residents as well as for myself, that political project of maintaining—and growing—the public sector’s role in the production and provision of housing is of utmost importance to making the vision of housing as a human right a concrete reality.
Going beyond repairs
The Green New Deal for Public Housing legislation calls for $172 billion in Section 9 grants to accomplish two things:
Meet the full national repair backlog of around $80-90 billion
Fund a full modernization project primarily focused on making the entire national public housing portfolio carbon neutral, with high efficiency utilities, windows, appliances, and so on, also estimated at around $80-90 billion.
In NYCHA’s case, with the repair backlog estimated at $40 billion as mentioned above, the modernization program—what NYCHA calls its Sustainability Agenda—could cost an additional $10 billion or more. And that’s the low bar for that a Green New Deal for NYCHA should do.
As Cea Weaver and I wrote about last month, these climate adaptive projects have the power to not only transform our public housing into modern, high quality homes for the most vulnerable New Yorkers, but could also help shove New York more broadly toward making the investments necessary to reduce carbon emissions:
In the same way that public investment in the procurement of electric bus and work vehicle fleets can help to grease the wheels for scaling up electric transportation productive capacity, investments in technology like heat pumps and efficient appliances and windows can help make these upgrades commonplace — and, importantly, cheaper.
In fact, the New York City Housing Authority, NYCHA, is in the planning stages of a building electrification retrofit pilot program for its older housing. It is also seeking to develop a new heat pump technology compatible with much of that older multifamily housing stock.
It is of course unlikely that, if public housing funds in BBB even make it through the Manchin and Sinema budget grater, Democrats in the Senate will get 51 votes for another $120 billion for public housing next year, and it’s even less likely Democrats will have a majority in the Senate any time in the next decade: the national political outlook is grim for the foreseeable future, and asking public housing residents to forego repairs in order to fight a Republican Congress is a dangerous proposition.
In my view, those of us who believe the housing—and climate—crises are in dire need of being addressed are at a crossroads: we can either continue to rely on the political game of chicken being played over funding in Congress, or we can take the wheel ourselves—and in addition, use the opportunity to build institutions to expand the public’s role in housing production and provision, just as the so-called “Sewer Socialists” in Milwaukee envisioned a century ago.
A long term vision
In thinking about the future, it’s important to keep in mind some stories from our history: ten years after Milwaukee’s municipal housing company built its small portfolio, the federal government began building its first public housing, moderate rent homes developed and owned by the public. The private real estate industry immediately realized the problem this presented for them: if the public sector could provide housing below market rates by not seeking private sector profits, with enough production it could drive housing costs down across the board—a direct threat to rentiers and their land value captures.
Of course to them, this was unacceptable, and so when the 1937 National Housing Act was codified into law, it included several important provisions that the 1936 George-Healy Act had stamped onto public housing2:
Homes had to be for only the lowest income Americans. The market knew they were never going to build housing for the poorest anyways, so the public doing so would not be a threat to rentiers.
Production of homes had to be tied to slum clearance areas, segregating the market both racially and economically, and further insulating real estate from the power the public sector could have over the industry.
These changes came from, and served the interests of the real estate industry:
At first, PWA (Public Works Administration) housing was available to anyone who desired to apply. As historian Gail Radford argues, “programs limited to only the poorest have debilitating long-range problems. Their narrow constituency makes them more susceptible to budget cuts, and participants are often stigmatized.” With the George-Healey Act of 1936, however, income ceilings for PWA housing were established, and housing directly built and owned by the government became a residential option only for families of modest means. …
In addition, the law’s equivalent elimination provision ensured that the public housing program would not constitute a significant threat to the private housing market. Public housing construction was linked to slum clearance and the replacement of substandard units, because slum buildings were razed and replaced with public housing buildings in the same areas.
But with public housing in the hands of New York state, not the hands of an increasingly unstable Congress, we can guarantee public ownership, and could have an opportunity to break free from the restrictions opponents of public housing placed on the program nearly 90 years ago, a vision I’ve written about before.
Moving forward with such a vision would require a great deal of work, but it is a way out of the mess we are in. Getting the funding and organizational structure needed to bring NYCHA homes into the 21st century is a strong agenda in its own right—and giving it the power to expand public housing beyond the limitations Congress placed on it in 1937 could be utterly transformational.
https://www.americanprogress.org/article/homes-for-all/, see notes from historian Gail Radford.